Stop the Cap! reader John writes to let us know Teresa Dixon Murray from The Plain Dealer in Cleveland, who broke the story about Verizon’s mysterious $1.99 data usage charge is back again with an update.

In a column last summer, I chronicled my battle with Verizon after I discovered Verizon had been concocting $1.99 monthly charges for supposed Web use by my family plan numbers. Verizon’s ruse ended the month that my son’s phone was dead and locked away for weeks.

Verizon responded directly to me in a meeting with several top executives, and they promised to investigate the problems suffered by thousands of customers nationwide. The company in August also promised to change its policy of charging customers if they accidentally hit their phone’s “mobile Web” button. The new policy: To get charged, customers now supposedly have to type in a Web address.

Dixon Murray

But Murray considers Verizon’s response more clever than truthful.  And the charges just keep on coming.  So are the comments piling up below Murray’s article on The Plain Dealer website reporting more mysterious charges.

Verizon’s response to the Federal Communications Commission claimed Verizon doesn’t charge customers who accidentally hit the mobile web button on their phones, because Verizon exempts the home page those phones first reach.  Murray points out Verizon forgot to tell the Commission that’s the policy now, after the bad press, but wasn’t the policy earlier when thousands of others were being billed as well.

But no matter, because Murray suggests Verizon has found all-new ways to sock those $1.99 fees on unsuspecting consumers.

Take my case. I got a new phone the first week of November and within 24 hours after I activated it, Verizon said I had incurred a $1.99 data usage charge. Never mind that I hadn’t actually used the phone yet.

Verizon said it accidentally eliminated the mobile Web blocks I had when it activated the new phone. Puh-leez.

So Verizon re-blocked my phone lines. Yet, the company says it recorded online access on Nov. 8, Nov. 14 and Nov. 21. Chris, a supervisor from Pittsburgh, is dumbfounded. He confirmed my phones are blocked. He doesn’t know how this is happening. He’s supposed to get back to me.

While I’m waiting, I’m making a few notes, actually a lot of notes, to give to the FCC.

Amazing that these billing errors always seem to work out in Verizon’s favor.  Maybe the cat has been using the phone to browse when you weren’t looking.  Maybe Verizon can continue to reap the rewards of collecting $1.99 from subscribers who feel it’s not worth the time and effort to protest the charges with a customer service representative.

This is ripe for one of those class action lawsuits where the lawyers make the big money and you get a coupon for a free cell phone case with your next purchase at a Verizon store.  Before that happens, Murray suggests you file a complaint with the FCC yourself.  Also, please do take the time to make the call to Verizon Wireless and demand credit if you’ve been hit with this charge.  It will cost them more than $1.99 just to handle your call, and you’ll probably get something more tangible than the outcome of a class action lawsuit.  It never hurts to ask them for additional discounts or free features to keep you a satisfied customer.

File A Complaint With the Federal Communications Commission

Just six months after the transition to digital television in the United States, proponents for the wireless mobile industry are back before the Federal Communications Commission asking the agency to “free up” additional frequencies by forcing major changes to local television stations.

The CTIA – The Wireless Association, a trade group representing big mobile providers like Verizon, Sprint, and AT&T, and the Consumer Electronics Association have suggested high power television broadcasting should be replaced with networks of lower powered regional relay transmitters serving smaller areas.  With considerably reduced power and antenna height, the groups argue, stations can be compacted into a smaller range of available channels, opening up new opportunities for wireless broadband services.

The number of available channels for television broadcasts has been shrinking since the early 1980s, when UHF channels 70-83 were largely reassigned for mobile phone use.  Today’s UHF band ends at channel 51, as channels 52-69 are reassigned to several interests, including first responders and other public safety uses.  With further compacting of the UHF band, up to 100-180 MHz of spectrum may be freed for mobile broadband use across the country.

How can this be done when the FCC believes many large urban regions of the country have used every available channel?  By reducing the coverage area of individual transmitters.  The wireless association claims interference problems come from high powered transmitters using soaring television antennas to give most television stations 30-40 miles of coverage area from a single transmitter site.  By dramatically reducing both the power and antenna height, and instead using a network of relay transmitters serving smaller areas, television stations can cover their local communities and reduce distant signal reception.  It’s these distant signals, and their capacity to interfere with other stations which requires the FCC to keep stations occupying the same or nearby channels far apart.

KATV-TV Little Rock's transmission tower

The CTIA suggests that with proper engineering of a low-powered network of transmitters, the Commission could reallocate UHF channels 28-51 for wireless communications instead, leaving UHF stations sharing channels 14-27.

The wireless lobby is selling this plan as a “win” for broadcasters, even though they will need to construct a network of lower powered transmitters and antennas to serve essentially every town in their existing service areas.  For most, that would involve constructing 15-20 new transmitter sites.  The wireless group says a more localized ‘cell-tower’ like approach to television transmission would serve areas currently not able to receive reception because of obstacles between the main high powered transmitter and a viewer’s set.  Proper placement of transmission antennas would maximize reception for each transmitter.  The wireless industry is even willing to bear the expense of purchasing transmitters, estimated at up to $1.8 billion dollars nationwide, to help broadcasters make the transition.  That’s actually a cheap price to pay considering the frequencies converted for their use are worth tens of billions more.

The plan got a boost of sorts from the Justice Department, who filed their own comments with the FCC suggesting adding frequency spectrum for wireless-based broadband should be a top priority for the Commission.

“Given the potential of wireless services to reach underserved areas and to provide an alternative to wireline broadband providers in other areas, the Commission’s primary tool for promoting broadband competition should be freeing up spectrum,” Justice officials wrote.

The Justice Department believes handing over additional frequency spectrum will promote competition, increase wireless broadband speeds, and lower prices, despite no evidence that wireless broadband competition would suddenly appear on the scene, or that the prevailing wireless carriers would actually reduce pricing and relax usage limits.

Broadcasters are not thrilled with the wireless industry plan.

The National Association of Broadcasters, to paraphrase, knocked the wireless industry for getting too greedy with its spectrum requests.  The NAB believes wireless providers like Verizon, AT&T, Sprint and T-Mobile are sitting on frequencies already allocated, but not yet used, for mobile communications networks, and they should use them before they come knocking looking for more.

Even more concerning to the NAB is the disruption the CTIA plan would cause for Americans still watching over-the-air free television.  Channel numbers would almost certainly have to be reassigned… again, at least for UHF stations.  That created significant confusion for viewers on the final date of the DTV transition in June when many stations either moved their digital signal back to their original analog channel number or relocated somewhere else on the dial.  Many Americans lost reception until they were taught to re-scan their televisions or converters to find the channels gone missing.

The NAB also questions the reception improvement a network of low power television transmitters could provide, particularly for those just on the edge of one relay transmitter and another.  Anyone trying to watch a low power television station today more than a few miles from the transmitter site can testify it’s not a pleasant experience.  Even greater concerns impact those “distant viewers” who may live between two or more cities, each with their own local stations.  Those viewers, using external antennas, can often watch television from several cities depending which direction their rooftop antenna is pointed, but could end up receiving no signals at all if CTIA’s plan is approved.

Broadcasters are also concerned about the impact lower powered transmitters will have on the forthcoming Mobile DTV service, which will bring programming to devices on-the-go.

The war over frequencies continues, as the broadcasters and mobile providers fight over who ultimately controls airwave real estate estimated to be worth $36-65 billion dollars.

Phillip Dampier

In a remarkable statement to the Federal Communications Commission in Washington, AT&T has joined Verizon in predicting the imminent demise of Ma Bell’s classic telephone network.

AT&T writes in its 30 page comment, “That transition is underway already: with each passing day, more and more communications services migrate to broadband and Internet Protocol (IP)-based services, leaving the public switched telephone network (“PSTN”) and plain-old telephone service (“POTS”) as relics of a by-gone era.”

AT&T claims abandoning the old legacy phone network would help the company devote its full resources into staying relevant by constructing a broadband, IP-based network that would deliver voice, data, and video to consumers, presumably over its U-verse platform.  That, according to AT&T, could help the company achieve universal broadband coverage in its service areas, but only if investment-friendly regulations are supported by Washington policymakers.

The Commission has been charged by Congress with formulating a National Broadband Plan that will result in broadband availability for 100% of the United States. That auspicious goal is within reach, but […] will not be met in a timely or efficient manner if providers are forced to continue to invest in and to maintain two networks. Broadband is dramatically changing the way Americans live, work, obtain health care, and interact with the government. Congress and the Commission have rightly made universal broadband access a core national priority. But achieving this goal will take an enormous investment of capital. Private investment from network operators has brought broadband access to over 90% of Americans, and these operators will continue to play a pivotal role in bringing broadband to the remaining 8-10% of citizens who do not currently have broadband access. It is accordingly crucial that the Commission pursue forward-looking regulatory policies that remove disincentives to private investment and encourage operators to extend broadband to unserved areas.

While broadband usage – and the importance of broadband to Americans’ lives – is growing every day, the business model for legacy phone services is in a death spiral. Revenues from POTS are plummeting as customers cut their landlines in favor of the convenience and advanced features of wireless and VoIP services. At the same time, due to the high fixed costs of providing POTS, every customer who abandons this service raises the average cost-per-line to serve the remaining customers. With an outdated product, falling revenues, and rising costs, the POTS business is unsustainable for the long run.

AT&T cites a growing number of Americans cutting their wired phone line service — 22% according to the National Center for Health Statistics.  Craig Moffett from Bernstein Research pegs it closer to 25%, with an additional 700,000 phone lines being disconnected every month.  With a shrinking customer base, the viability of companies providing only wired phone service has come into question.  Verizon and AT&T, the nation’s largest phone companies, have made the judgment it’s a dying business.  Conversely, Frontier Communications and a few other independent phone companies remain believers in rural copper wire phone networks, and are willing to buy the discarded, mostly rural regions their bigger counterparts can’t wait to exit.

But AT&T’s advocacy for an end to “plain old telephone service” is just a tad self-serving when one explores their “To-Do” list for Washington regulatory agencies and lawmakers.  AT&T suggests their future plan benefits all Americans.  Critics would contend it mostly benefits AT&T and its shareholders, especially in light of AT&T’s future revenues being directly impacted by customers disconnecting their AT&T phone lines.  AT&T themselves note collective industry revenue for basic phone service fell from $178.6 billion in 2000 to $130.8 billion in 2007, a 27% decrease.

AT&T’s Action Plan to Avoid Obsolescence Explored

At the heart of AT&T’s proposal for 21st century telephone service is an end to analog telephone service, designed more than 100 years ago to carry voice calls, and the launch of broadband-based service to every home in their service area.  From this new platform, AT&T can deliver telephone, television, and Internet service over a single network.  In fact, they already do in several cities where AT&T’s U-verse has launched. Instead of getting one revenue stream from basic phone service, AT&T can now earn from any number of services a broadband platform can support.

AT&T compares their plan with the transition from analog to digital television, except you won’t have to trade in your existing phones or attach converter boxes to every telephone in the house.  Just like the switch to digital television, AT&T wants a date certain to pull the plug on Ma Bell’s old phone network, the sooner the better.

But AT&T’s plan has plenty of strings attached.

First, the company believes the only path to private investment and a successful transition is a near-complete deregulation of the telephone industry.  It wants the federal government, specifically the FCC, to take control of oversight of phone companies across America, if only to end a patchwork of state regulations and service requirements.  Remember, the Ma Bell most Americans grew up with was a regulated monopoly.  In return for guaranteed profits, phone companies agreed to meet service obligations, provide service to any home or business that wanted it, serve the disabled, and provide discounted phone service to the economically disadvantaged.  Rural customers were assured they would have access to phone service and at reasonable prices, and if something stopped working, government oversight ensured problems would be repaired to the customer’s satisfaction.

In AT&T’s view, such requirements are quaint and outdated, and it wants to bear few of those burdens going forward.  Indeed, in a too-cute-by-half aside, the company argues that since it will design the network to operate under the same protocol the unregulated Internet uses, it should be unregulated as well.

Such deregulation could impact a myriad of policies governing phone service that most Americans take for granted — minimum service standards, requirements that telephone companies complete calls between one another – even if competitors, and reasonably priced basic phone service even in the most remote locations.  But AT&T is asking for even more – a comprehensive review and possible elimination of any regulation that could be interpreted as interfering with the transition to an all-broadband telephone network.  AT&T includes everything but the kitchen sink in this category, ranging from service quality requirements, reporting, recordkeeping, data collection, accounting, and depreciation and amortization rules governing how quickly the company can write off obsolete equipment.

Ma Bell's network is due for a retirement, advocates AT&T

Ironically, AT&T wants deregulation -and- access to public taxpayer dollars to construct their new network.  The company advocates government-funded award programs to promote universal broadband access.  One would provide money for wired broadband service, perfect for companies like AT&T that want to build those networks, and another for wireless mobile projects to expand service into unserved or underserved areas, also perfect for AT&T Mobility — the same wireless carrier slammed by Verizon Wireless for largely ignoring rural America with 3G wireless data upgrades.

While there is some justification for a review of federal and state rules that may no longer realistically apply to today’s telecommunications marketplace, AT&T goes out of its way to be self-serving in its recommendations.  It dangles the bright and shiny object of a 21st century broadband-based telephone network, but only if they get to run it essentially “no questions asked,” with little oversight and an infusion of public taxpayer dollars to compliment private investment.

AT&T may be correct that the days for Ma Bell’s “plain old telephone service” are indeed numbered.  But for a company that earns billions in profits and answers to shareholders demanding maximum return, shouldn’t their long term well-being first be a question between AT&T management and shareholders?  Are they incapable of a private course correction that makes their future relevance more secure?  AT&T’s U-verse did not require public tax dollars to be successful, and the company spent generously on lobbyists and astroturf campaigns to smooth the way forward with “statewide franchising,” bypassing local government oversight.

The real question on the table is how far does the Obama Administration and the FCC want to go to achieve universal broadband?  AT&T suggests that only massive deregulation will entice private investors to step up and make the investments required to help achieve whatever definition of “universal broadband” the Commission comes up with.  But that price is way too high to pay.  AT&T answers first and always to its shareholders.  If they want public tax dollars funding, even in part, their transition to an all-broadband future, they must also answer to the other “stockholders,” namely the American people helping to foot the bill.

Verizon Wireless has defended their decision to double the early cancellation fee (ETF) for consumers purchasing “smartphones” and netbooks from the wireless carrier.  In a letter from Kathleen Grillo, Senior Vice President of Federal Regulatory Affairs, Verizon claims the new $350 fee is justified and actually benefits consumers by providing them with a substantial discount on the cost of the equipment they might not otherwise be able to afford.

“The higher [cancel fee] associated with Advanced Devices (click link to see a list of impacted equipment) reflects the higher costs associated with offering those devices to consumers at attractive prices, the costs and risks of investing in the broadband network to support these devices, and other costs and risks,” Grillo wrote as part of a 77-page submission to the Federal Communications Commission, which demanded an explanation for the price increase.

Grillo claims Verizon’s fees are actually good for consumers:

Verizon Wireless’ term contracts with ETFs promote consumer choice and broadband deployment. This pricing structure enables Verizon Wireless to offer wireless devices at a substantial discount from their full retail price. By reducing up-front costs to consumers, this pricing lowers the barriers to consumers to obtaining mobile broadband devices. It thus enables many more consumers, including those of more limited means, access to a range of exciting, state of the art broadband services and capabilities. The company’s pricing structure therefore promotes the national goal of fostering the greater adoption and use of mobile broadband services. At the same time, consumers are protected by Verizon Wireless’ detailed disclosure practices described in this response, by the Worry Free Guarantee, which allows customers to terminate within 30 days of activation without an ETF, and by the monthly reduction in the ETF amount.

Grillo claims Verizon customers can also purchase a phone at the retail price and avoid a service contract.  Verizon Wireless, for example, charges contract customers $199.99 for the Motorola Droid.  But customers who do not want a contract can purchase the phone from Verizon for $559.99.

In North America, most major cell phone companies subsidize the cost of wireless handsets and make up the difference over the life of a typical two-year service contract.  Cell phone companies claim consumers benefit from the arrangement because they are able to acquire a new phone every two years at a substantial discount.  Some consumer advocates and members of Congress disagree, suggesting carriers more than earn back the cost of the subsidized phone over the life of the contract.  Although customers purchasing a retail-priced phone don’t have to worry about a two year contract, they pay artificially higher prices for service plans designed to recoup the costs from those who did take discounted phones.  The result is a strong incentive to commit to a contract and take the phone, since you will essentially be paying for it anyway.

The Government Accountability Office found early termination fees to be among the top four consumer complaints filed with the FCC about wireless carriers.  Sen. Amy Klobuchar (D-Minnesota) re-introduced legislation December 3rd to try and limit early termination fees.

Senator Amy Klobuchar

“Changing your wireless provider shouldn’t break the bank,” Klobuchar said in a Dec. 3 statement. “Forcing consumers to pay outrageous fees bearing little to no relation to the cost of their handset devices is anti-consumer and anti-competitive.”

The Cell Phone Early Termination Fee, Transparency and Fairness Act would prevent wireless carriers from charging an ETF that is higher than the discount on the cell phone that the company offers consumers for entering into a multi-year contract. For example, if a wireless consumer enters into a two-year contract and receives a $150 discount with the contract, the ETF cannot exceed $150.

The legislation would also require wireless carriers to prorate their ETFs for consumers who leave their contracts early so that the ETF for a two-year contract would be reduced by half after one year and to zero by the end of the contract term. In addition, the bill would mandate that wireless carriers would provide “clear and conspicuous disclosure” of the ETF at the time of purchase.

Co-sponsoring the bill with Klobuchar are Sens. Russ Feingold, Jim Webb and Mark Begich.

[flv]http://www.phillipdampier.com/video/CNBC Amy Klobuchar ETF Fees 9-13-07.mp4[/flv]

Back in 2007, Sen. Klobuchar introduced nearly identical legislation to deal with mobile phone providers charging high termination fees.  CNBC ran this debate between Klobuchar and the cell phone trade association.  Klobuchar found herself in a 2-against-1 debate when the CNBC anchor defended the wireless industry.  (9/13/07 – 5 minutes)

Redefining their "new position" to basically mean their "old position"

AT&T’s all-new position on Net Neutrality suspiciously sounds like its old position on Net Neutrality.

In a three-page letter addressed to FCC Chairman Julius Genachowski, James W. Cicconi, AT&T’s senior vice president for external and legislative affairs wrote in glowing terms about the Obama Administration’s efforts to expand broadband service and preserving the “open Internet.”  Those goals are shared by AT&T, according to Cicconi.  But are they?

AT&T has spent millions fighting Net Neutrality policies, calling them unnecessary and harmful to broadband innovation and investment.  Ed Whitacre, Jr., AT&T’s former chairman and CEO infamously kicked off a contentious debate when he declared content producers shouldn’t be allowed to use AT&T’s “pipes for free.”

Little has changed.

Yesterday’s letter to Genachowski brings nothing new to the table from AT&T.  In short, they still feel broad-based Net Neutrality regulations will be harmful to investment.  AT&T wants the FCC’s definition of Net Neutrality to be “flexible enough to accommodate the types of voluntary business agreements that have been permitted for 75 years.”  Flexible, in this instance, means gutting the clear, unambiguous prohibition against fiddling with Internet traffic and inserting loopholes that gut the policy’s effectiveness.  AT&T’s “voluntary agreements” never include consumers.

AT&T wants to provide “value-added” services to content producers who agree to pay more to obtain them.  That typically means additional speed or a guarantee of prioritized service.  Unfortunately, on a finite broadband network, those getting preferential treatment can reduce the quality of service for those who don’t pay.  By trying to refocus the FCC’s attention on obsessing over subjective interpretations of “unreasonable and anti-competitive” content discrimination, AT&T gets a free pass to configure a broadband protection racket and rake in money from content producers afraid to be stuck in the slow lane.

Cicconi

AT&T also continues to complain that such regulations would prevent the company from offering consumers “value-added” broadband services.  As long as those services do not discriminate, providers can freely provide network enhancements like faster speed tiers, “Powerboost” technology which temporarily speeds up connections, and even network management which keeps viruses, malware, and other junk traffic away from subscribers.

Ben Scott at Free Press, a consumer advocacy group, read between AT&T’s latest lines and saw a naked effort to gut Net Neutrality before being enacted:

“After leading a rabid anti-net neutrality lobbying campaign for years, AT&T now submits a letter to the Federal Communications Commission purporting to offer common ground,” Scott said. “What they are proposing would allow them to violate the core principle of Net Neutrality — letting them control the Internet by picking winners and losers in a pay-for-play scheme. That would destroy the free and open Internet, and the FCC should reject this false compromise out of hand.”

“Make no mistake, AT&T opposes Net Neutrality. Their proposed solution is a bait and switch. As bait, they ask to return to a standard of nondiscrimination that was long applied to the telephone network. But they fail to mention that this standard was part of a system of pro-competitive common carriage rules that they have railed against applying to broadband networks for years. They haven’t changed their mind about common carriage. They are simply cherry-picking one piece of the old rules and calling it a compromise. The entire Net Neutrality debate is about the creation of a new system of nondiscrimination that fits broadband networks, not telephone networks –a debate the telephone companies forced by stripping away consumer protection rules from broadband under the Bush administration,” Scott added.

Public Knowledge also called out AT&T in a statement from Gigi Sohn.

AT&T has tried to draw what is an imaginary line among types of discrimination. The company advised the FCC that while ‘unreasonable’ discrimination can be banned, any discrimination caused by ‘voluntary commercial agreements’ is just fine because the parties involved agreed to it. That is nonsense.

As we have said consistently, the Internet has functioned as well as it has because control of the crucial roles at each end of the network. Side deals made by a carrier like AT&T and a content provider or other company take that control out of the hands of the consumer.

Similarly, it is unfortunate that AT&T has resorted to the old tactic of threatening not to invest in its network if the company does not get what it wants in a rulemaking. The growth of the Internet will be driven by consumer demand, not by gimmicks. If the company is truly interested in consumers, it will allow consumers to remain in control.